Landlords expand portfolios despite price rises

Property investors looking to purchase homes for letting purposes paid nearly two per cent more in April than in March, according to Paragon Mortgages’ latest Buy-to-Let Index.

The specialist lender found that landlords continue to retain their confidence in the property market, expanding their portfolios and contributing to a price inflation growth rate of 4.7 per cent over the past six months. April prices were 7.62 per cent higher than 12 months previously.

Despite a 0.3 per cent increase in the average rental income from £10,082 in March to £10,113 in April, rental yields fell nationally from 6.26 per cent to 6.16 per cent.

The East Midlands currently produce the highest yields (6.84 per cent), with areas of the north close behind. Due to high property prices, yields in London and the south-east are lower.

According to the index, investors in a typical northern property 12 months ago will have experienced overall returns of 42.41 per cent, ahead of Greater London at 40.88 per cent.

“In all parts of the country, upbeat landlords are buying properties at higher values, secure in the knowledge that there is good tenant demand out there for the right property in the right place,” commented John Heron, managing director of Paragon Mortgages.

In early May, the specialist mortgage lender found that 38.5 per cent of landlords had witnessed a recent rise in achievable rents, while most investors expected yields to rise over the next year.

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